Malls Recovering Slowly

March 4, 2011

Rents rose while vacancies fell in the fourth quarter at large regional malls in the U.S., but smaller strip malls still suffer from oversupply, lower rents, and a high vacancy rate, according to Reis Inc, a real estate research firm.

In the fourth quarter, the vacancy rate at strip malls was 10.9%, while the vacancy rate at regional malls fell from 8.8% to 8.7%.

Strip mall tenants have taken advantage of lower rents by trading up to better spaces within their existing centers, moving into new centers, or moving into large malls.

"It’s a musical chairs game," says Ryan Severino, Reis economist. "We really need serious demand to come back to the point where it entices tenants into the market, either to expand their spaces or actually get new tenants back to the marketplace. That’s when you’ll finally see the needle move."

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